As the residential real estate market continues to recover, developments in Southern California point to new trends within Los Angeles and throughout the nation. Specifically, the economic crisis - and all the attendant developments related to the rise and fall of prices in the last few years - now offers a return to normalcy. That is, the push by investors to buy foreclosed properties and distressed homes, resulting in purchases at the expected resale price, now has owners in a holding pattern -- which is not necessarily a bad thing.
This situation, which furthers a more conservative buy-and-hold strategy among investors, is good for everyone: residential brokers have qualified clients who want to own something, prices have a chance to stabilize and the market as a whole - the historic criteria by which we measure financial appreciation - revert to more predictable standards. These events offer all real estate brokers a reliable example of how to respond to increased demand in their respective cities.
To the extent that investors view the Los Angeles housing market as an inviting opportunity, and my professional experiences underscore this fact, they believe we are in a new era - a more attractive environment - where speculation is less common and growth is more steady. Brokers should welcome this news because it gives them the strongest argument about buying residential real estate: that a home is an investment, something that can steadily grow, provide income (for rental properties) and weather economies of both expansion and contraction. Indeed, brokers should work even more ambitiously with investors; their assets - knowledge and analysis about long-term performance for housing within a certain city or neighborhood - are they key to transforming a home from an inflated commodity into a tangible source of success.
The lesson here is simple: brokers and investors can work together, so the outcome is a restorative one; both parties can identify properties where, despite competitive bidding by other investors, the price for a home - and its relative worth among similar homes in the same neighborhood - can foster a sense of patience. For the one thing this market does not need - the chief agent responsible for distorting prices - is wild speculation. Fueled with easy access to credit, and accelerated by inexperienced buyers with unrealistic expectations, those factors are (and were) a recipe for financial disaster. Hence the importance for brokers and seasoned investors to collaborate with each other, creating a climate of reassurance and economic vitality.
By following these principles, Los Angeles can go from city with an asterisk (denoting excess inventory and massive foreclosures) to a place where the real estate market is alive and well. Brokers in other cities can replicate the success of Southern California, and bring depressed neighborhoods back to life. This period may, in fact, become a new golden age of recovery, stability and ultimate success.
The duty rests with investors and brokers to devise a plan away from speculation and towards stability. These groups are already near that point; they simply need to continue working with each other, for their own mutual benefit and the good of the community. The rewards will reverberate far beyond Los Angeles and the rest of Southern California.
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